Couple Accused In $2.5 Million Nightclub Swindle

A top financial officer at a company that operates high-end night spots in Connecticut and Boston was arrested Wednesday and accused of stealing $2.5 million in cash from the company over the last two years.

Lynn A. Scheufler of Woodstock, the 34-year old, ex-controller for Boston-based Big Night Entertainment Group, is suspected of losing more than a million dollars of the stolen money gambling with her husband, Craig L. Galligan, at Connecticut's two casinos, according to an affidavit prepared by the IRS and other federal sources.

Big Night Entertainment is a six-year old business dedicated, according to its promotional materials, to bringing "New England dining and nightlife to a new level." It operates seven restaurants or nightspots, including three at the Foxwoods Resort Casino in Ledyard – Shrine, Scorpion Bar and High Rollers.

The nightspots generate large amounts of cash and Scheufler controlled the money and how revenue was accounted for on company books, according to the affidavit.

Both Scheufler and Galligan, 40, were arrested at their home and presented in U.S. District Court in Hartford Wednesday. She was charged with fraud and structuring financial transactions in a fashion that circumvents federal cash reporting requirements. Galligan was charged only with illegally structuring transactions.

Both were released after posting bonds, but neither could be reached Wednesday.

Big Night entertainment also declined to discuss the matter.

"We are deeply disappointed by this incident, and are working hand in hand with both the Internal Revenue Service and United States Attorney's Office as they uncover all the facts surrounding this elaborate scheme," a publicist for the company said. "Due to the ongoing nature of the investigation we are unable to provide further comment at this time."

Big Night Entertainment maintained and operated automatic banking machines at its nightspots and part of Scheufler's responsibilities involved collecting bags of cash proceeds each morning from the night spots and using some of the money to replenish the ATM machines.

Initially, Scheufler misused company ATM cards to make unauthorized withdrawals from the machines, according to federal authorities. Later, the authorities said she began removing substantial sums of case from the company's night deposit boxes.

An audit by the IRS attributes the theft of $2.5 million in cash to Scheufler, according to the affidavit.

Scheufler used her position as controller to hide the losses by manipulating her company's books, the authorities said. They said Galligan made numerous cash deposits into a variety of accounts that the couple held jointly.

Federal investigators said the deposits were intentionally made in amounts less than $10,000. Banks are required under federal law to report transactions in excess of $10,000.

Between January 2010 and March, when the embezzlement was detected and Big Night Entertainment fired Scheufler, the couple deposited more than $700,000 into their bank accounts, according to the affidavit..

"One bank employee stated that Galligan would bring deposits consisting of two, strapped bundles of $5000 each, and that, prior to depositing, he would pull out a $100 bill to make the total deposit $9,900," the affidavit said.

The two are accused of wagering more than $1.4 million between 2009 and 2012 at Connecticut's two casinos. They reported on their federal income tax returns that they broke even, winning as much as they lost.

They reported wining $10,000 in 2009, more than $700,000 in 2010 and more than $1.7 million in 2012. But during the same period, they reported equivalent losses, according to the affidavit.

The IRS said Scheufler earned $67,000 in salary in 2010 and $79,000 in 2011. Galligan, a financial analyst at another Connecticut company, earned $60,000 in 2101 and $50,000 in 2011.

Scheufler has denied stealing money, according to federal authorities. But she and Galligan admitted illegally structuring deposits in sums less than $10,000 "in order to avoid the extra paperwork that they understood would be involved with depositing $10,000 or more in a single transactions," according to the affidavit.